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AlbanyConsultant

Lost earnings... on rollover?

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This may not specifically by a 403b question, but it is happening in an ERISA 403b, so here I am.

A participant has been trying to roll her money into the plan (I believe from a former 403b) for about six months, but due to... less-than-stellar 'assistance' from the financial advisor, it still hasn't happened.  She has calculated that the amount she would have earned based on her fund selection less her earnings in her old account is ~$140 (her math looks pretty spot-on), and she's wondering who owes this to her.  The HR dept seems willing to pay it just to make peace.

Let's ignore the idea that since she controlled the money, she could have invested it however she wanted in the interim and therefore is responsible for her own lack of investment gains over this timeframe.  Of course, I can't find any legal justification for the NFP to pay this amount - there are only deferral and match in the plan, so I can't do anything creative with profit sharing (well, I guess I could since she's not an HCE, but that seems extreme for this small amount).  Is there any legitimate way for the employer to make her 'whole'?

And, yes, I'm already trying to straighten the broker out so this doesn't happen again.  I suspect there's even less legal standing for their firm to deposit that amount.

Thanks.

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Has the money left the prior 403(b) plan [warning - I know little or nothing about 403(b) plans]?

If so, is there a problem with the completion of the rollover having taken so long that it cannot be considered a rollover any more?

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Other than her having full control of the money the whole time, I do have to wonder why she didn't go beyond the financial advisor/broker to others at the employer/HR if her request was being ignored.  And how is she going to be able to prove what funds she would have chosen? I just rolled over a pension payout and my new brokerage firm (new account) wouldn't let me pick the funds until the money was in their bank.  Does $140 sound reasonable based on the balance in question?

Does the broker/financial advisor not have EPLI/E&O insurance? If the employer were to reimburse her in some way, I would expect the broker to cover it since it seems to be their mistake.  

Is this is a precedent you want to set?  If anything this is something the broker should make right and I would consider working with them to see what they would do before doing anything as the employer.

 

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2 hours ago, My 2 cents said:

If so, is there a problem with the completion of the rollover having taken so long that it cannot be considered a rollover any more?

New info seems to indicate that it was rolled to an IRA in the meantime, so we're still OK on that score.

 

2 hours ago, hr for me said:

Other than her having full control of the money the whole time, I do have to wonder why she didn't go beyond the financial advisor/broker to others at the employer/HR if her request was being ignored.  And how is she going to be able to prove what funds she would have chosen? I just rolled over a pension payout and my new brokerage firm (new account) wouldn't let me pick the funds until the money was in their bank.  Does $140 sound reasonable based on the balance in question?

Does the broker/financial advisor not have EPLI/E&O insurance? If the employer were to reimburse her in some way, I would expect the broker to cover it since it seems to be their mistake.  

Is this is a precedent you want to set?  If anything this is something the broker should make right and I would consider working with them to see what they would do before doing anything as the employer.

She did go to HR, who kept dumping it back on the broker.  Everyone was very patient up until now.

Proving the fund selection is easy because she completed a rollover form that had investment elections - that and the rollover acceptance form must be submitted together.

If the client does actually reimburse, then I agree that they should bring this up with the advisor and there should be a payment there, but that will not be the plan's problem. :)

And, no, I don't want to set a precedent at all.

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why was everyone (including HR) patient for 6 months? were there extenuating circumstances?  

In this day and age, 2 weeks would be my maximum of "being patient" both from the HR side and the participant side unless you could tell me why it was being held up. So I can understand this lady's frustration.

But in the end I would either pay this lady out through AP/Payroll or have the broker do it outside of the plan since those are the two entities that are responsible for the mess. 

 

 

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